Choose one of the two competitors that you explored in your Topic 3 paper. Create an executive summary presentation of the findings on the chosen company from the Topic 3 report (seven to nine slides, exclusive of the title and reference slides) with appropriate speaker notes that could be delivered to a C-suite executive in a corporation. Note that while you should provide comparisons to your company's competitor and the industry averages, the executive summary should focus on a single company from the two competing companies. Consider the feedback from your instructor on the case study report you completed in Topic 3 and include the following in your presentation.

1. A summary of the industry and company chosen.
2. An overview of the chosen company's liquidity ratios relative to the industry averages and to the competitor.
3. An overview of the chosen company's solvency ratios relative to the industry averages and to the competitor.
4. An overview of the chosen company's profitability ratios relative to the industry averages and to the competitor.
5. Describe the importance of the budgeting process in the chosen company relative to these ratios.
6. Prepare a variance report and balanced scorecard for the chosen company, comparative against the competitor company and industry averages for liquidity, solvency, and profitability.
7. Identify which ratios impact capital budgeting decisions and explain how these ratios impact the decisions.
8. A concluding summary of how the chosen company performed compared to the competitor and the industry.

Be sure to cite three to five relevant sources in support of your content. Utilize the GCU Library and external sources for your research.

Title slide and reference slide are not included in the slide count. Include speaker notes below each content-related slide that represent what would be said if giving the presentation in person. Expand upon the information included in the slide and do not simply restate it. Ensure that the speaker notes include 50-100 words per slide.

 

 

My Paper:

 

Benchmark – Interpreting Financial Statements

 

               When asking a company how they are doing in their financial situation there would only be one place they could look to get an accurate and realistic answer. They would look at their income statement to see if their bottom line is positive or negative. That would be the indicator on how well the business is doing or if they need to change things compared to others in the industry. They want to know how they compared to others in the industry compared to others in similar category. Managers and business owners of the company should always have a good idea of how much profit they are making. The confusing looks or “I’ll get back to you” begins when you question the liquidity, solvency, and ratios. The two businesses I choose to analyze are two of the leading companies in the industry in America.

Liquidity is measured by the company’s short-term abilities and their ability to pay whatever obligations they may have that is matured or keeping them from having cash for any unexpected needs. In the accounting world there is several formulas that you can use to measure the liquidity of any company that could include the working capital and its current ratio. You are going to want to use the liquidity ratio formula that measure quality and adequacy of all your currents assets if your company is ever having a cash problem. It will help you be able to meet liability due.

Current Ratio:                                   Target                                Walmart                             Industry Average

Current Assets/current liabilities               0.84                      0.76                                     1.05

 

Target’s current ratio shows that for everyone dollar the company has of current liabilities it has a responsibility for those current assets. So, the ratio is 1 to 1 which means that for everyone dollar coming in one dollar is also going out. A one-to-one ration can mean that you are in trouble or close to being in trouble. Ideally you want to always try to be a one point five to one or a two to one ratio. Your financial statements should whether your company’s obligations are going to be current or long term. Many companies have current liabilities to a company that has more current assets but normally they all lack a liquidity or short-term debt payment process.

Trying to determine the financial health of one company takes vital and important formulas to investigate. Doing so is known as solvency. A good debt to equity ratio is known to show the measurement that will be calculated when dividing the company’s total liability by their shareholders equity. That will help you evaluate the financial leverage, but it can also indicate the company’s ability to withstand any and all loss. The measure will show a degree to which the company is trying to fiancé their operations by their debt versus owned funds. That will show the ability of the shareholders equity to cover the outstanding debt in the event the business begins to spiral downwards.

Debt to Equity Ratio:	Target	Walmart	Industry Average
Total Liabilities/ Shareholder equity	0.88	0.63	0.87 (avg from above)

 

The higher the debt-to-equity ratio is will show whether or not the businesses uses it debt to finance its growth or not. Any lender and investor will automatically look to see whether or not the ratio is high because that will mean a riskier investment. For investors it will show that the business may not be able to repay their debt. If the business debt showed an equity ratio on the lower end (closer to zero) it means the business may have not had to rely on any type of borrowing to finance their operations in the past. It is uncertain whether or not a lender or investor would want to invest in the company still because they are not able to see the potential or growth. They want to be able to see a profit and value that they could receive in return since they allowed the company to borrow and increase their operation.

When trying to find a final measurement of a company’s overall financial health is their profitability. The profitability ratio will be measured by the company’s income as well as their operating success for any given period of time of time the company is in operation. Any income or lack off will be calculated and could affect their ability to obtain debt and equity when trying to finance. It can affect their ability to grow going forth.

Price Earnings Ratio	Target	Walmart
Earnings per Share	18.79	26.01
Earnings per Share =	5.96	4.60

              

The price earning ratio is a reflection on what type of assessment a company may have with their earnings to the investor you are seeking. The lower your ratio is may suggest that the market will be less optimistic. In the graph you see that the market is less optimistic about Target then it is about Walmart, but it also shows that Target stock is underpriced. Most ratios want to see your profitability has a higher value towards is similar industry or relatively close to indicate the company is doing well.

When looking and comparing a company’s financial health there will always be solvency and liquidity. They are the two most important terms that you will constantly see that can be explained if the companies begin heading in the direction of a financial disaster but also if they are mean to survive of a longer period of time. It could also be relating to the ability to sell assets at a quicker cost in order to raise cash. The words near term are more important than other terms when it comes to solvent companies. Its used when one owns more then what it would typically owe when adequately trying to liquidate to ensure there is enough cash. They need to ensure they have enough money to pair bills and be sustainable for their future and whatever else may happen. Knowing the profitability of a company is also knowing the company’s ability to try and generate any type of revenue that is relative to their operation cost, balance sheets, and the shareholders equity. Those will be things that show how well the company can generate a profit using their past existing assets.

As you read through my paper you will see that the data, I have presented suggest that Walmart is far healthier financially than Target. Both Walmart and Target are not companies that can be easily liquid but in the event that they needed to you will see that Target is a far better position.  The term solvency is when a company is compared to the average relative industry total that shows that Target is a higher solvent company. When comparing companies to the industry you see what makes it more solvent companies. Walmart is currently balancing in the middle making it more solvent than Target. The price earning ratio of Walmart compared to Target shows that Walmart has always been more profitable than Target. If I were an investor looking to an investor in either id come to the assumption that I would be better off choosing Walmart.

 

My instructor comments / what I need:

Morgan, I appreciate the effort to submit work to analyze and compare the two companies. You have some good staring information and input. In terms of the comparisons and specific areas reviewed, there is more work needed in the area of liquidity to fully examine the concept area for the companies. Additional ratios an evaluative methods, along with associated written evaluation needed in that area. Additionally, further specific personal analysis of researched areas and ratios also beneficial. The paper is solid in effort, but formatting could be improved to flow the information in a more concise and linear method, using additional transitional comments. The conclusion also needs to be stronger to summarize key performance indicators to support the position. Solid effort, but further work needed